Background Conventional treatments have limited effectiveness in patients with advanced, recurrent, or metastatic osteosarcoma. Gene therapy offers a promising therapeutic option for osteosarcoma. However, the clinical application of current gene-editing tools (e.g. CRISPR-Cas9) is limited by their large size and high immunogenicity. The newly discovered OMEGA-TnpB system, with its compact size (~ 400 aa), shows great potential for tumor gene editing.Objective To develop efficient and compact gene-editing tools by engineering the OMEGA-TnpB system, and validate their potential for osteosarcoma gene therapy.Methods Through rational design, TnpB mutants were obtained. A single-strand annealing (SSA) reporter system was employed to screen mutants, and their editing efficiency was validated in HEK293T and osteosarcoma cell lines (143B). The optimized TnpB mutant (ISYmu1-L225K) was used to knock out the osteosarcoma gene MDM2. The effects on cell proliferation, apoptosis, migration, and invasion were assessed by RT-qPCR, flow cytometry, CCK-8, wound-healing assay, and Transwell assay.Results Several highactivity TnpB mutants were identified, among which ISYmu1-L225K exhibited significantly higher editing efficiency than enOsCas12f1 in both HEK293T (P<0.01) and 143B cells (P<0.01). In HEK293T cells, its efficiency at certain loci showed no significant difference compared to SpCas9. Knockout of MDM2 reduced osteosarcoma cell proliferation (P<0.01), increased apoptosis rates (P<0.01), and inhibited both migration (P<0.01) and invasion (P<0.05). Conclusion This study successfully develops the TnpB mutant ISYmu1-L225K, which exhibits enhanced gene editing efficiency in mammalian cells. ISYmu1-L225K suppresses the malignant behavior of osteosarcoma cells by targeting MDM2, providing a novel strategy for precision therapy in osteosarcoma.